How pandemic could change retirement payments


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A push to delay an increase to compulsory retirement payments has been boosted by Reserve Bank Governor Philip Lowe, who has warned it could limit pay rises and cost jobs.

Prime Minister Scott Morrison has also conceded the recession sparked by the COVID-19 pandemic was a “rather significant event” that could be a roadblock to the government’s commitment to lift superannuation contributions from 9.5 per cent to 12 per cent by 2025.

The boost to retirement payments is already legislated but a growing group of Liberal MPs are lobbying to delay or scrap the change.

Their efforts received added ammunition from Dr Lowe on Friday, who said the evidence showed increased super contributions would lead to “lower wage growth over time”.

“There will be less current income and if there is less income there may be less spending, and if there is less spending there may be less jobs,” he said.

Asked about Dr Lowe’s comments, the Prime Minister said he was “very aware of those issues” and that despite his government’s election commit­ment, it had “to be considered”.

Dr Lowe was responding to questions from committee chair and Liberal MP Tim ­Wilson.

“The Reserve Bank gets that the most important thing is to create jobs, and increasing the compulsory super guarantee will hit wages and ultimately job creation and neither are good,” Mr Wilson said.

It came as Mr Morrison and Dr Lowe called on state governments to pull their weight and boost spending to support the nation’s economic ­recovery.

Dr Lowe said state governments needed to worry less about protecting their credit ratings and borrow more.

“The states do control many of the state levers here — they control the infrastructure programs, they do much of the health and education spending,” he said.

“What’s important is that we use the public balance sheet in a time of crisis to create jobs for people.”

Victoria has spent $10.5bn on its COVID-19 response, according to federal estimates, which is $4.9bn less than NSW.

Victoria’s net debt is now at $40.3bn, compared to the commonwealth’s net debt of $488bn after committing $314bn to health and economic support measures.

Mr Morrison backed Dr Lowe and said that the commonwealth “cannot do all the fiscal heavy lifting on its own”.

“It is not a licence to make whoopee with taxpayers’ funds,” Mr Morrison said.

“The projects have got to be good projects. The spending must always be good ­spending.”

EMERGENCY SERVICES’ LEADERSHIP SWITCH-UP

A critical command post has been filled by emergency services chiefs during the coronavirus crisis even though a government pandemic plan declared it was a job for the chief health officer.

State Emergency Service and Forest Fire Management Victoria bosses are among those to have rotated through the state controller position in recent months.

But the action plan for ­influenza pandemic — drawn up in 2015 by Emergency Management Victoria and the Department of Health and Human Services — says the chief health officer should hold the role with “overall responsibility for emergency response operations”.

Emergency services insiders and the state opposition have raised concerns with the structure after co-ordination issues were exposed in Victoria’s hotel quarantine system and contact tracing program.

Premier Daniel Andrews said on Friday that the current structure “was nothing more or less than a reflection that this is truly unprecedented”.

At the start of the pandemic, the Premier released a plan which said governance structures were based on the state’s existing pandemic influenza manual, drawn up in the wake of the swine and bird flu.

It also put the Emergency Management Commissioner in charge of “response co-­ordination”.

The plan was supposed to be updated every three years, but a new version has not been published since 2015.

Shadow Attorney-General Edward O’Donohue said the “proven framework had been arrogantly ignored”.

“The near public absence of the Emergency Management Commissioner and the lack of clear lines of responsibility points to a shambolic response to this public policy disaster by the Andrews Labor Government that is costing lives and ruining communities,” he said.

Mr Andrews said Chief Health Officer Brett Sutton and health experts were “deeply involved” in the government’s response.

Last month, DHHS secretary Kym Peake was ­appointed state controller, in a reshuffle that elevated Prof Sutton and Victoria Police Commissioner Graham Ashton to the state control meeting team. An emergency services insider said they “should have been around the table from the beginning”.

The source said there had been an “utter failure” to implement robust command structures, pointing to Prof Sutton’s acknowledgment that he did not have oversight of hotel quarantine.

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